> Growth is good. But as with most things, the more we've had of it, the
> urgent the next bit is. Diminishing marginal returns. Decent housing,
> food and clean water are more urgent than mansions and SUVs..
One should note that this is only true over short time scales. A generation that grows up with affluence level X will consider it the minimum they can live on, and try to achieve something substantially better. Also, a large fraction of society is not satisfied with anything less than the mansion - there is a wide diversity of opinion over when enough is enough.
> On practical grounds, almost no one likes unfettered
> competition applied to
> themselves. Humans are loss avoiders. People can deal with
> great inequality
> when they themselves aren't worried about the means of
> existence. When the
> market drops people out of the middle class they get
> agitated. They become
> less concerned about the rights to property they no longer
> have and more
> concerned with the right to existence. It's no good telling
> them they're
> being inconsistent..
> On practical grounds, shirking is less of a problem when dealing with
> who enjoy their work. The incentives from welfare or unemployment
> and from progressive income taxes have less relevance for the teacher or
> scientist who has already passed up a high paying job as a doctor or
> than for a blue collar worker whose work is toil. He calls "the New
> the increasing group of educated people who like their jobs, value job
> satisfaction more than increasing their incomes past a certain point, and
> expect both satisfaction and freedom from stress about their basic
> needs. In general, they won't laze on welfare; they'd get bored. In
> they're not out to steal your yacht; the benefit isn't worth it. And some
> them enjoy automating toil, freeing up workers who can be
> educated and brought into the New Class.
This description may fit teachers and scientists. It does not fit knowledge workers at all. Most of us don't stop worrying about money until we can afford lots of our favorite techno-toys, which means upper-middle class at least.
Also, it is a mistake to think that the workers can all become part of this class. Most people don't especially enjoy anything you could reasonably expect to be paid for - they want to go fishing, hunt deer, watch the game, party, read a book, attend a play, etc. If they can support these activities without having to work, most of them will.
> So. On practical grounds, private ownership and production
> are a success, and vital to any society, and urgent for any poor one. On
> practical grounds, a wealthy society does not need to be growing at the
> fastest possible rate, which is why its members will be buying insurance
> and engaged in other members, not all market friendly, to protect their
> elemental affluence. A wealthy society can afford to sacrifice 1% of GDP
> growth and buy basic social insurance for all of its members, and to
> that all have access to basic
> food and medicine, and above all to a good education. This will make
> people happier; most feel more secure from want, and the rich
> don't have to imprison themselves as they're doing right now in Brazil.
Isn't Brazil a good argument for rapid growth? Their problem isn't large income disparities, its that there are too many people who can't afford food.
In more general terms, this analysis ignores the fact that the benefits of growth do not end when you have a warm bed and a full belly. Wealth can be spent to buy health, and the more wealthy you are the more health you can get. No nation on Earth is wealthy enough to provide top-notch medical care to everyone, and the best way to solve this problem is to grow as fast as possible. Growth won't remove the inequality, but it will make everyone better off than they were.
Also, the 1% idea is completely divorced from reality. Most people don't want to work, for the very simple reason that they have other things they would rather do. If you make it possible for them to do the things they really want to do without having to work, many of them won't. You end up having to support a significant fraction of the population, which costs much more than 1% (try 20% for starters, and it will grow with time). All of this is just for the basic living standard - throw in medical care and the potential cost instantly becomes larger than your GDP.
To make these ideas work, you need a world in which all basic human needs can be met without significant human labor - and if we could do that, we wouldn't need welfare programs in the first place. We may see such a world after nanotech and advanced AI arrive, but we aren't there yet.
> He also points out that a moderately managed society might be more
> than a laissez faire one, in that it would avoid the very severe
> loss caused by the deep recessions such as America had frequently in the
> century. Lots of people unemployed equals lots of people not producing.
Why should we expect future economists to be any better at it than those of the 18th, 19th and 20th centuries? There has never been a time when government simply left the market alone. The governments of the 19th and 20th centuries have tried every scheme they could think of to prevent recessions and boost economic growth. At this point it is clear that such approaches don't work. We don't know nearly enough about economies to be able to fine-tune their operation by government fiat.
America tried 'moderately managed' society in the 19th century, and 'heavily regulated' society in the 20th. Other countries have experimented with 'totally regulated' society in various guises. I can think of no instance in which anyone has actually tried laissez faire - usually they just make speeches about it while enacting more regulations.